Arena REIT posts in-line FY result, targets 5% growth in FY25
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The news: Arena REIT increased its full-year earnings in FY24, as steady growth in the childcare sector helped the learning centre landlord meet analysts' forecasts.
The numbers: Arena posted statutory net profit of $57.5 million down 22.5% compared to last year. However, net operating profit grew 4.7% to $62 million. Earnings per security (EPS) was up 3.2% to 17.65 cents and distributions per security (DPS) rose 3.6% to 17.4 cents.
Arena's assets totalled $1.62 billion by 30 June, 3% higher than a year prior, but net asset value per security was down 0.3% to $3.41.
The company reaffirmed FY25 DPS guidance of 18.25 per security, reflecting growth of 4.9% on FY24.
The context: Arena said income growth was driven by contracted annual and market rent reviews during the year, as well as acquisitions and development projects completed in both FY23 and FY24.
Statutory net profit was driven down due to a lower revaluation gain on investment properties and derivatives compared to the previous year, it said.
Arena shares tumbled last month after the company announced the completion of a $120 million institutional placement to support $92 million worth of new acquisitions. Jarden analysts flagged that while the stock has underperformed since the capital raise, Arena "should be one of the strongest growth guidance among the passive REIT group".
UBS analyst Cody Shield said the FY24 result and FY25 guidance were both in line with expectations with portfolio performance "tracking well".
What they said: Arena's managing director and CEO Rob de Vos said: "Strong macroeconomic drivers continue to support growth in the demand for essential community services across Australia".
"These themes, combined with Arena's disciplined origination, capital management and asset management expertise have positioned the business well to sustainably deliver on its purpose and investment objective of delivering predictable distributions to securityholders with the prospect for growth."
Jarden analysts said: "The results highlight the steady growth of childcare and the benefit of triple-net, CPI-linked leases and a steady development pipeline. With the capital structure further strengthened, we see scope for [Arena] to accelerate growth initiatives and beat on initial guidance for FY25".
The sources: ASX announcement, Jarden research, UBS research
